Pakistan has failed when it comes to trade with China

Published: June 26, 2016
Commerce ministry reviewing first phase of FTA, finds country exported in 253 out of total 7,550 tariff lines.

Commerce ministry reviewing first phase of FTA, finds country exported in 253 out of total 7,550 tariff lines. PHOTO: REUTERS

ISLAMABAD: Pakistan has been unable to fully tap and utilise the concessions granted by China under the China-Pakistan Free Trade Agreement (CPFTA) and only used 3.3% of the total tariff lines, said a review of the first phase of CPFTA.

According to official sources, the Ministry of Commerce is reviewing the first phase of the CPFTA, which revealed that Pakistan could only export in 253 tariff lines out of the total 7550, where average export value was $500.

Pak-China trade pact in favour of Beijing: Sartaj Aziz

“Pakistan mainly exported raw materials and intermediate products such as cotton yarn, woven fabric and grey fabric while value-added products were completely missing,” they said. “This is why Pakistan has not benefitted from the CPFTA. Some of the value-added products like garments are included in the concessionary regime.”

The officials said that Pakistan shared its concern regarding the insufficient utilisation of concession and competition faced by the local industries due to cheap imports from China. They said it was agreed that the tariff reduction modalities of the second phase would be designed in a way to accommodate all the genuine concerns of both countries adequately.

Pakistan and China are already negotiating for the second phase of Pak-China FTA since 2011, however, Minister for Commerce Khurram Dastgir recently said that the negotiations had been halted as Pakistani businessmen were protectionists and Chinese wanted more liberalisation.

The CPFTA on trade in goods was signed on November 24 2006 and implemented on July 7, 2007. The FTA on trade in services was signed on February 21, 2009 and in operational since October 10, 2009.

Under the Trade and Service Agreement, Pakistan will open the first banking channel of Habib Bank Limited in China by the end of this year and the Chinese authorities have already given the approval by relaxing the reserve limit from $20 billion to $15 billion.

Is Pakistan really a dream destination for China?

Bilateral trade volume, which amounted to $4 billion in 2006-7, reached an all-time at $12 billion in 2014-15. Pakistan’s exports jumped to $2.1 billion in 2014-15 from $575 million in 2006-07. Correspondingly, China’s exports to Pakistan increased to $10.1 billion in 2014-15 from $3.5 billion in 2006-07.

Pakistan’s major exports to China are cotton yarn/fabric, rice, raw hides and skins, crude vegetable material, chemical material, fish and fish preparations and crude mineral. Major imports from China are machinery (all sorts) and its parts, fertiliser manufactured, chemical element, yarn and thread of synthetic fibre, iron and steels, chemical material and product, vegetable and synthetic textile fibre, road vehicles and their parts, non-ferrous metals, tyres and tubes of rubber.

Published in The Express Tribune, June 26th, 2016.

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Reader Comments (16)

  • SKChadhas
    Jun 26, 2016 - 9:11AM

    “Mian Kee Jooti Mian Ke Sar …. Aur Uski Mehnat Meri Jeb Main” good business ……. :-)))Recommend

  • Neelam
    Jun 26, 2016 - 9:53AM

    Pakistan is tge only true friend of china in this world.Recommend

  • Mohsin
    Jun 26, 2016 - 11:16AM

    Betay jealousy mar jaey ga …….agar mein fail bhi ho Gaya To kya…..watever helps u feel better abt ur self mentally sick lot…Recommend

  • Tp
    Jun 26, 2016 - 12:10PM

    Good luck Pakistan. Recommend

  • New Exporter, Lahore
    Jun 26, 2016 - 12:12PM

    Ministry of commerce was quick enough to review the performance of CPFTA lines with China being under-utilized, but they forgot how can Pakistan export value-added and finished products to China who is self-sufficient in every field and way while we are handicapped in many ways at the same time. The only way we can export to any country is if we are provided with 24/7 cheap electricity and the wolves from FBR are taken away from the exporters. Provide uninterrupted electricity to the industry at cheap rates, and see how all economical problems are reversed. Until then, just dream of exports and trades. Recommend

  • quatro
    Jun 26, 2016 - 1:02PM

    No surprise – Pakistan loves to talk about trade but when you look closer Pakistan doesn’t have a great selection of items to trade – seems to be limited to textiles. Pakistan needs a major infusion of foreign capital to establish a diverse mfg base …. that ain’t going to happen until Pakistan fixes a number of problems (judicial, corruption, xenophobia, terrorism etc).Recommend

  • Jun 26, 2016 - 1:27PM

    Pakistan should look for new markets in ChinaRecommend

  • Pakistani-Khi
    Jun 26, 2016 - 1:28PM

    The problem, our leader doesn’t have time to look after country’s economical growth which benefits its people. They are extremely busy in perusing their career for ‘Chair’ and ‘Rule’ by pulling each other legs and dialogues. Recommend

  • Brainy Bhaijan
    Jun 26, 2016 - 1:45PM

    It is because our priority is to find out who is a better Muslim, and who can be declared a RAW agent, instead of focusing on integrating with the rest of the civilized world.Recommend

  • BlackHat
    Jun 26, 2016 - 2:16PM

    Objectively speaking, Pakistan is not alone in this plight – almost all of China’s trade partners are in the same box, though larger economies are able to withstand the negative trade imbalance a little better. African economies, in particular, have been almost irrecoverably devastated.

    WTO deals have pushed the world mindlessly towards free trade and poorer countries are having to pay for that folly. It is a pity there are no alternative models on the horizon to the present economic colonization by other means. This ill-balanced regime can not continue without resulting in a disaster of global proportions.Recommend

  • Frank Mossman
    Jun 26, 2016 - 3:15PM

    Shame on you Mr Sharif. And you call yourself a businessman. What proportion of the team that negotiated CPEC with the Chinese were Pakistani businessmen ? The shoemaker (bureaucrats) should stick to his last.

    BEFORE talking to the Chinese about the second stage of CPEC, Pakistani businessmen, economic/urban/industrial planners & lawmakers should design a complete masterplan involving export product selection, designs for industrial production units, plans for transportation hubs for raw material inputs and for finished products, environmental impact studies, urban plans for accomodating the workforce, Financing, taxation and legal requirements for facilitating the masterplan need to be addressed. The plan should anticipate and provide flexibility for changes in the global business environment over at least two decades. Recommend

  • optimist
    Jun 26, 2016 - 3:29PM

    It is not easy to compete China as they have ‘economy of scale’.
    Only country that matches that population is India but even India has big trade deficit with China. Recommend

  • Salman
    Jun 26, 2016 - 5:57PM

    And then we say that Chinese goods will destroy our local market. Recommend

  • Rajesh
    Jun 26, 2016 - 6:36PM

    Look it is very difficult for pakistan to trade with china as they do not have anything to offer except textiles and mangoes. Even in that also they are facing stiff competition.. Whereas china is benefitting with FTA as they have many products to dump in pakistan. So in this equation government should be cautious in signing FTA. Recommend

  • Sunil
    Jun 27, 2016 - 3:35AM

    Apart from meat, agricultural, some mined stuff and Jihad. What value added, hi-tech, services, etc. do you have to offer China or the world? Recommend

  • bharat
    Jun 27, 2016 - 1:30PM

    Had the Kashmir issues been solved,trade would have been no issue but since Kashmir is not solved, trade continues to remain low and weakRecommend

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